The Bank of Ghana, which raised its rates by 100 basis points at its last meeting in May in response to rising inflation, said inflation is likely to be close to the bank's upper band and the upside risks include potential pass-through of further petroleum price adjustments, possible adjustment of utility tariffs and pressures from the impending public sector wage settlement.
These pressures, however, could be moderated by the tight monetary policy stance, ongoing fiscal consolidation and seasonal factors from the oncoming harvest season.
"However, subject to the rate and timing of the adjustment in utility tariffs, the forecast could return to central path by the first quarter of 2014," the central bank said. The bank has a year-end target of 9.0 percent inflation, plus/minus 2 percentage points.
Ghana's inflation rose to 11.2 percent in June, the highest since April 2010, from 10.9 percent in May, largely due to petroleum price adjustments, demand pressures and seasonal factors, the bank said. The reconstituted CPI basket put inflation at 11.4 percent from 10.6 percent in March, it added.
The central bank said its composite index of economic activity (CIEA) indicated a marginal pickup during the second quarter with the index showing growth of 3.4 percent compared with a 0.6 percent contraction in March.
The consumer confidence index also improved in June from April while business sentiment softened.
In the first quarter, Ghana's Gross Domestic Product contracted 3.1 percent from the previous quarer, for annual growth of 6.7 percent, up from 6.0 percent.
Ghana's finance ministry has forecast growth of 8 percent this year.
Preliminary data for the first half show that government revenue and expenditure were below their targets, with the budget deficit 4.5 percent of Gross Domestic Product on a cash basis, within target.
Ghana's gross international reserves fell by US$436.4 million to $4.9 billion from $5.3 billion end-December, enough to cover 2.7 months of imports.
Ghana's cedi currency depreciated by 3.4 percent against the U.S. dollar from January to June, a slower rate than a decline of 17.2 percent in the same period in 2012, the bank said.